Brahim’s willing to sell BAC stake

By Sharen Kaur
sharen@mediaprima.com.my
Published in NST on August 21, 2014

THE major shareholder of Brahim’s Holdings Bhd said he may consider selling the company’s stake in in-flight caterer Brahim’s Airline Catering (BAC) Sdn Bhd should there be a request from Malaysia Airlines (MAS).

Brahim’s owns 70 per cent of BAC, which has a 25-year contract (2003-2028) valued at RM6.25 billion to provide catering and related services at Kuala Lumpur International Airport (KLIA) and Penang International Airport.

MAS holds the rest of the stake in BAC.

“If MAS wants to buy our 70 per cent stake, we can let go. So far, there is no proposal. In fact, we have continuous engagements with MAS on how to reduce cost,” Brahim’s Holdings executive chairman Datuk Ibrahim Ahmad Badawi told Business Times.

BAC is formerly known as MAS Catering. In 2002, MAS was looking to sell the company as it had accumulated losses of RM240 million.

MAS Catering also had negative shareholders’ funds and was bleeding RM40 million to RM50 million a year.

In 2003, Brahim’s, the only Malaysian company providing industrial catering at that time, came in and acquired 70 per cent of MAS Catering.

It paid RM170 million upfront and took over the accumulated losses in return for a 25-year concession.

Analysts valued MAS Catering at no more than RM50 million at the time.

“MAS wanted to maximise the sale. Who would pay so much upfront to take over a lossmaking company? That’s why in return, MAS gave us a 25-year contract so that we could recover the investment.

“We spent an additional RM58 million on MAS Catering for machinery, equipment and control systems at KLIA to operate more efficiently,” said Ibrahim.

Brahim’s, which operates the world’s biggest halal flight kitchen, was in the limelight for getting the 25-year catering contract and many said the deal was lopsided.

“If you study it, this was a bailout for MAS.

That was what we did for the national carrier.

We worked hard for 10 years and turned the company around. Since we took over, we have paid out more than RM120 million in dividend and rebate to shareholders.”

On how much BAC is worth now, Ibrahim said it is difficult to gauge the actual value of the company.

“When we took over MAS Catering, it was serving 28,000 meals a day.Today, it can serve up to a record 62,000 meals a day. On average, we serve 55,000 meals a day,” he added.

“We worked hard for 10 years and turned the company around.” Datuk Ibrahim Ahmad Badawi Brahim‘s Holdings executive chairman